Environmental assessment [electronic resource] : Pinnacle Gas Resources Waddle Creek plan of development Fork's Ranch plan of development

2008·3.4 MB·English

by  Montana.Dept. of Natural Resources and Conservation

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Township 9 South, Range 42 East, Section 36: All
Township 9 South, Range 43 East, Section 36: All

Big Horn County, Montana

January 30, 2008 1
CHAPTER 1
PURPOSE AND NEED FOR ACTION

1.1 Proposed Action

Pinnacle Gas Resources, Inc. (Pinnacle) has proposed two Plans of Development (POD) known
as the Waddle Creek POD and Fork’s Ranch POD. These PODs include the drilling of up to 32
coal bed natural gas (CBNG) wells on State land to ten different coal seam targets. This area is
located approximately 17 to 22 miles east of Decker, Montana in Big Horn County. Project
construction is proposed to commence immediately upon issuance of required permits and
approval. Montana Board of Oil and Gas Conservation (MBOGC) accepted these PODs for
review on November 2, 2006. This Environmental Assessment was jointly prepared by DRNC
Trust Land Management Division and MBOGC. MBOGC will issue their own separate Record
of Decision prior to issuing regulatory permits on the 32 wells on state lands. The project area
lies east of Fidelity’s CX Field and Pinnacle’s Dietz Field, where 824 wells are currently
producing and 18 wells have been drilled and are awaiting completion.

Figure 1: Map of Project Area
Waddle Creek POD is outlined in red on far left side of map and Fork’s Ranch POD is outlined in green on right corner of map.

The proposed action would involve drilling up to 32 CBNG wells and utilization of both existing
infrastructure and proposed new infrastructure to support this development. There would be
approximately 4 miles of new two-track access roads and approximately 11 miles of new
corridor with water, gas, and power lines. These lines would be co-located whenever possible to
minimize impacts to resources. Four evaporation/ containment ponds have been proposed to
support management of water produced in association with the natural gas production. The gas
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would be taken to existing compressors located on fee lands and legal access would be obtained
in the form of easements and licenses for the pipelines.

Pinnacle Gas Resources would use truck-mounted, water well type rigs for drilling the wells.
The surface of the pad site would not be bladed nor would a pad site be built unless topography
required it. The site may be mowed before the rig is brought on site. The area of the pad site
would be approximately 120’ by 120’. A small reserve pit, approximately 4 feet X 20 feet X 40
feet would be constructed to serve the wells drilled on each pad. Approximately ½ acre would
be required to drill 2 wells on a pad site. The number of wells per site depends on the number of
coal seams targeted. If it is necessary to remove any topsoil then it would be salvaged and used
in reclamation of the site. Construction would be restricted to dry or frozen conditions to
minimize impact to the site.

Well heads and other surface facilities would be equipped with fiberglass covers that would be
painted an unobtrusive color to blend with the natural environment. Pits and facilities would be
fenced to protect them from livestock damage or from livestock becoming harmed. Initially pad
sites and corridors would have exposed areas of soil and would be more noticeable during the
construction phase of development. Once the wells are drilled, producing, and brought on line
all areas that could be reclaimed would be seeded to native grass species.

The department has developed detailed Operating and Field Reclamation Requirements (See
Appendix A) that would provide guidance on all aspects of the construction and reclamation
phases that protect the resource in CBNG operations.

Pinnacle Gas Resources would install remote monitoring equipment that would measure natural
gas and water production. This remote monitoring would reduce the amount of traffic to the well
sites once the wells are brought on production.

This environmental assessment focuses on 32 proposed wells on state-owned land. It
incorporates by reference and tiers off of the EIS completed jointly by MBOGC, Montana
Department of Environmental Quality (MDEQ), and Bureau of Land Management (BLM). A
Finding of No Significant Impact (FONSI) was issued by MBOGC on March 26, 2003. The
Montana Statewide Final Oil and Gas EIS and Amendment of the Powder River and Billings
RMP (MT FEIS), approved April 30, 2003, is incorporated in this analysis.

1.2 Need for the Action

Pinnacle Gas Resources holds valid state oil and gas leases within the Waddle Creek POD and
Fork’s Ranch POD Project Area. Pinnacle submitted a request to drill coal bed natural gas wells
on state land to the Montana Department of Natural Resources and Conservation, Trust Land
Management Division (TLMD) on November 2, 2006. Oil and gas leases issued by the State of
Montana require the lessee to submit proposed activities on the state lease to the department for
review. The Montana Environmental Policy Act (MEPA) requires that an environmental review
be completed if the action has a potential for impacting the human environment.

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The Montana Department of Natural Resources and Conservation, Trust Land Management
Division manages state owned trust lands under the direction of the State Board of Land
Commissioners (Land Board). Both the Land Board and the Department have the fiduciary duty
to manage and utilize these lands to generate revenue for the trust beneficiaries, which are the
schools throughout the state of Montana. It is TLMD’s responsibility to consider environmental
impacts and to protect the future income generating capacity of the lands.

Coal bed natural gas production is relatively new to Montana. Since the first wells were drilled
on state lands and began producing in 2003, total revenue has reached over $3.87 million for the
school trust fund with current revenue exceeding $80,000 per month.

1.3 Relevant Plans, EIS, EA, Regulations, and Other Documents
1.3.1 Montana Final Oil and Gas EIS and Amendment of the Powder River and Billings
Resource Management Plans (MT FEIS) approved April 30, 2003.
1.3.2 The Pinnacle Gas Resources Waddle Creek POD and Fork’s Ranch POD accepted by the
Montana Board of Oil and Gas Conservation on November 6, 2006.

1.4 Objectives of the Action
1.4.1 Objective #1: Develop a coal bed natural gas project in southeastern Montana on state
minerals.
1.4.2 Objective #2: Generate revenue for the State of Montana school trust beneficiary
Common Schools (K-12).

1.5 Decision(s) That Must Be Made

The Minerals Management Bureau Chief of the Trust Land Management Division of the
Montana Department of Natural Resources and Conservation must decide whether to
recommend development of coal bed natural gas (as briefly described in Section 1.1 and in detail
in Section 2.2). He must also determine if the selected alternative (plan) would or would not be a
major State action, significantly affecting the quality of the human environment. If the Bureau
Chief determines that it would not significantly affect the quality of the human environment,
then he could draft and submit a Record of Decision (ROD) to the Land Board for their
consideration. If the Land Board approves the Department’s proposed ROD, the Bureau Chief
would then execute the ROD and the project could proceed.

1.6 Scope of this Environmental Analysis
1.6.1 Issues Studied in Detail
1.6.1.1 Air Quality (Issue #1)
Increased activity in the project area could result in increased air emissions from
drilling equipment and increased travel to and from the well locations for the
duration of the project.
1.6.1.1 Cultural Resources (Issue #2)
Land disturbance caused by constructing the well pads and the related
infrastructure that is necessary for completion of this project could have an impact
on the cultural resources in the area.
1.6.1.2 Hydrology (Issue #3)
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Coal bed natural gas production carries water from the coal seams during the
production phase. Management of produced water would consist of
evaporation/containment ponds throughout the project area that are capable of
handling the water produced from these state wells. Stockwater developments
could also be installed if desired by the state surface grazing lessee. Other
potential secondary management options that Pinnacle Gas Resources could
consider in the future are managed irrigation on fee lands and injection if a
suitable zone is found. Discharge of treated water to surface waters could also be
considered if adjoining lands are also developed. These other secondary
management options have not been proposed by Pinnacle, have not been reviewed
in this document, and would not be authorized by any record of decision issued
pursuant to this document. If alternative water management options are proposed
in the future, they would require additional review and permitting through the
appropriate agency.
1.6.1.3 Lands and Realty (Issue #4)
There is currently a State of Montana Grazing lease that covers both state sections
in this project. Coal bed natural gas development would decrease the AUMs that
are currently set for this lease and could interrupt grazing patterns during the
drilling and construction phases.
1.6.1.4 Soils (Issue #5)
Construction of the well pads and infrastructure and the increased travel on the
two track trails into the state sections could result in soil impacts and effect soil
productivity. Erosion could also be a problem throughout the duration of this
project.
1.6.1.5 Vegetation (Issue #6)
Construction of the well pads and infrastructure and the increased travel on the
two track trails into the state section could result in the temporary removal of
vegetation. Increased activity in the area could increase the potential for noxious
weed introduction.
1.6.1.6 Wildlife (Issue #7)
Coal bed natural gas development could alter the habitat or create disturbance that
could be detrimental to wildlife species.
1.6.1.7 Social and Economic (Issue #8)
Coal bed natural gas development would generate revenue for the school trust
fund.

1.6.2 Issues Eliminated From Further Study
1.6.2.1 Noise (Resource #1)
Coal bed natural gas development would increase the noise level in the project
area during the initial drilling phase.
Rationale for Elimination: This project area lies in an area that has
minimal human activity. There would be no compressor stations or
batteries on state lands, they would use existing compressor stations
located on fee lands. The increased level of noise would only occur
during the weeks that it would take to drill the wells.
1.6.2.2 Aesthetics (Resource #2)
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Drilling and completing up to thirty-two wells on state lands would require
insulated fiberglass covers and pump panels be placed on the surface to house the
well casing, piping, valves, flow meters and pressure gauges for each well.
Rationale for Elimination: This project area lies in an area of hills and
valleys, making the long-range visibility of these well housings
improbable. In addition, the covers and panels are small (less than 4 feet
tall) and would be painted in a manner to blend in with the landscaping
whenever possible. There is minimal human activity on the state sections,
so public viewing of the wells is not probable.
1.6.2.3 Recreation (Resource #3)
Wildlife uses these state sections for habitat. As a result, there is some recreation
potential for fall hunting of big game.
Rationale for Elimination: There is public access to Waddle Creek but
this project would not impact the public’s ability to recreate on these state
sections. There may be some short term disturbance of wildlife where
they would move out of the area for a short period of time but they should
return once drilling is completed. Development of minerals does not
restrict use for recreational use.

1.7 Applicable Permits, Licenses, and Other Consultation Requirements
1.7.1 Air Quality Permits from MDEQ for drilling rig operations.
1.7.2 Plan of Development approval and Permits to drill from Montana Board of Oil and Gas.
1.7.3 Approval of a Storm Water Pollution Prevention Plan from MDEQ.
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CHAPTER 2
ALTERNATIVES INCLUDING THE PROPOSED ACTION

2.1 Introduction
The purpose of this chapter is to describe and compare the alternatives by summarizing the
environmental consequences. There are two alternatives outlined in this chapter: the No
Action Alternative (Alternative A) and the Proposed Action (Alternative B). Based on the
descriptions of the relevant resources in Chapter 3: Affected Environment and the predicted
effects of both alternatives in Chapter 4: Environmental Consequences, this chapter presents
the predicted attainment of project objectives and the predicted effects of all alternatives on
the quality of the human environment in comparative form, providing a basis for choice
among the options for the decision maker and the public.

2.2 Description of Alternatives
2.2.1 Alternative A: No Coal Bed Natural Gas Development (No Action)
2.2.1.1 Principal Actions of Alternative A
Coal bed natural gas on state land would not be developed. However, ongoing DNRC
permitted and approved activities would continue in the project area:
(cid:1) Livestock grazing: an existing surface lease for 283 AUMS (animal unit months) on
these two sections would continue on the project area.
(cid:1) Vehicle access: The Waddle Creek and Fork’s Ranch PODs are accessed by two track
trails.
(cid:1) Offset Development: Selection of Alternative A does not prevent offset lands from
being developed for coal bed natural gas production.
2.2.1.2 Past Relevant Actions
The plan of development area lies to the east of the existing CX Field boundaries
developed by Fidelity Exploration and Production Company and to the southeast of the
Dietz Field boundary developed by Pinnacle Gas Resources. There are currently 824
productive coal bed natural gas wells in those two fields and another 18 awaiting
completion.
2.2.1.3 Present Relevant Actions Not Part of the Proposed Action
No other PODs are being reviewed concurrently with this action.
2.2.1.4 Reasonably Foreseeable Relevant Actions Not Part of the Proposed Action
Pinnacle Gas Resources, Inc. has submitted the Black Eagle Butte POD, the Fourmile
East Project POD, the Fourmile West POD and the Deer Creek Fee POD to BOGC. Coal
bed natural gas development would likely continue in and around the CX and Dietz
Fields over the next 30 years.

All of these activities would also occur if Alternative B, which is described in
Section 2.2.2, were implemented.

2.2.2 Alternative B: Coal Bed Natural Gas Development on State Lands (Proposed
Action)
2.2.2.1 Principal Actions of Alternative B
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(cid:1) Up to 32 coal bed natural gas wells would be drilled on two state sections. There
would be 8 pad sites on each state section with 2 wells per pad or 16 wells per
section. Each well would be drilled to target a different set of coal seams within
the Fort Union Formation. (See Table 1, 2, and 3 for state well lists). Each well
would target five separate coal seams. The natural gas from the seams would be
commingled to minimize the number of wells required on each pad site. The pad
sites would be approximately 120 ft by 120 ft. and the site would be mowed.
These would be reseeded to native grass species after drilling
(cid:1) Underground power lines would be located in corridors off of four power drops
originating from overhead lines that run through the state sections.
(cid:1) Two track trails would be utilized to access the eight well pads in each of the state
sections.
(cid:1) Produced water would be managed through 4 evaporation/containment ponds
with 2 each on Waddle Creek POD and Fork’s Ranch POD. Stockwater
developments could also be installed if desired by the state surface grazing lessee.
Other potential secondary management options that Pinnacle Gas Resources could
consider in the future are managed irrigation on fee lands and injection if a
suitable zone is found. Discharge of treated water to surface waters could also be
considered if adjoining lands are also developed. These secondary management
options have not been proposed by Pinnacle, have not been reviewed in this
document, and would not be authorized by any record of decision issued pursuant
to this document. If alternative water management options are proposed in the
future, they would require additional review and permitting through the
appropriate agency.

Table 1: Wells Proposed on State Land - Waddle Creek POD; Section 36, T9S, R42E

Site Well Well Name Coal Seam QTRQTR Section Township
Range
1 1 02S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper NWNE 36 T9S R42E
42 Cook/Lower Cook
2 02/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ NWNE 36 T9S R42E
Kendrick
2 3 04S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper NNNW 36 T9S R42E
42 Cook/Lower Cook
4 04/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ NWNW 36 T9S R42E
Kendrick
3 5 06S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper SENW 36 T9S R42E
42 Cook/Lower Cook
6 06/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ SENW 36 T9S R42E
Kendrick
4 7 08S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper SENE 36 T9S R42E
42 Cook/Lower Cook
8 08/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ SENE 36 T9S R42E
Kendrick
5 9 10S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper NWSE 36 T9S R42E
42 Cook/Lower Cook
10 10/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ NWSE 36 T9S R42E
Kendrick
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6 11 12S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper NWSW 36 T9S R42E
42 Cook/Lower Cook
12 12/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ NWSW 36 T9S R42E
Kendrick
7 13 14S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper SESW 36 T9S R42E
42 Cook/Lower Cook
14 14/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ SESW 36 T9S R42E
Kendrick
8 15 16S/An/Ca/UC/LC-36-09- Smith/Anderson/Canyon/Upper SESE 36 T9S R42E
42 Cook/Lower Cook
16 16/Br/K/F/Kn/Ke-36-09-42 Brewster/King/Flowers/Knoblach/ SESE 36 T9S R42E
Kendrick

Table 2: Wells Proposed on State Land on Fork’s Ranch POD; Section 36, T9S, R43E

Site Well Well Name Coal Seam QTRQTR Section Township
Range
1 1 01S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U NENE 36 T9S R43E
pper Cook/Lower Cook
2 01/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno NENE 36 T9S R43E
blach/Kendrick
2 3 03S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U NENW 36 T9S R43E
pper Cook/Lower Cook
4 03/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno NENW 36 T9S R43E
blach/Kendrick
3 5 05S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U SWNW 36 T9S R43E
pper Cook/Lower Cook
6 05/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno SWNW 36 T9S R43E
blach/Kendrick
4 7 07S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U SWNE 36 T9S R43E
pper Cook/Lower Cook
8 07/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno SWNE 36 T9S R43E
blach/Kendrick
5 9 09S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U NESE 36 T9S R43E
pper Cook/Lower Cook
10 09/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno NESE 36 T9S R43E
blach/Kendrick
6 11 11S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U NESW 36 T9S R43E
pper Cook/Lower Cook
12 11/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno NESW 36 T9S R43E
blach/Kendrick
7 13 13S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U SWSW 36 T9S R43E
pper Cook/Lower Cook
14 13/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno SWSW 36 T9S R43E
blach/Kendrick
8 15 15S/An/Ca/UC/LC-36-09-43 Smith/Anderson/Canyon/U SWSE 36 T9S R43E
pper Cook/Lower Cook
16 15/Br/K/F/Kn/Ke-36-09-43 Brewster/King/Flowers/Kno SWSE 36 T9S R43E
blach/Kendrick

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2.2.2.2 Mitigation and Monitoring
The Montana Department of Natural Resources and Conservation, Trust Land
Management Division has developed the Coal Bed Natural Gas Field Operating and
Reclamation Requirements to mitigate disturbances and cumulative impacts to the
environment. A copy of these requirements is provided in Appendix A of this
environmental assessment.

The Montana Department of Environmental Quality has regulatory authority over the
monitoring of water quality and air quality issues. The Montana Board of Oil and Gas
Conservation has regulatory authority over oil field operations, including pit construction
and reclamation. In conjunction with these regulating agencies, Pinnacle Gas Resources,
Inc. has identified the following mitigation and monitoring measures in addition to the
standard requirements enforced by MDEQ and MBOGC:
(cid:1) Pinnacle would develop and submit a Storm Water Pollution Prevention Plan
(SWPPP) prior to development of the project.
(cid:1) The first wells to produce water from each target coal seam or combination of
coal seams would be designated as one of the four POD reference wells, and
would be sampled within 30-60 days of initiation. They would have the ability to
be sampled at the wellhead for water quality.
(cid:1) Annual water quality analyses must be completed on all state evaporation pits.

2.3 Summary Comparison of the Activities, the Predicted Achievement of Project
Objectives, and the Predicted Environmental Effects of All Alternatives

2.3.1 Summary Comparison of Project Activities
Project Activity Alternative A (No Action) Alternative B (Proposed Action)
Drill CBNG wells on State 0 Wells Drilled 32 State Wells Drilled
Land
Overhead Power lines Installed None There would be .95 miles on Waddle Creek
and 1.3 miles on Fork’s Ranch.
Underground Power lines None Underground power lines would be located
in corridors that originate from four power
drops.
Two Track Trails/All Weather Two existing two track trails. Nine new two track trails running from the
Roads existing two track trails to the well
locations. This would be approximately 4
miles of new two track trails.
Water lines/Gas lines None Water line and gas line would be installed
for each well along corridors. These lines
would run along existing and new roads
and tie into a central line. The gas would
be transported to existing compressor
stations located on fee surface.
Evaporation/Containment None Four evaporation ponds with two each on
Ponds Waddle Creek POD and Fork’s Ranch
POD. All of these ponds would be serving
the state wells.
Water Treated – Discharged None Pinnacle Gas Resources could apply to
Montana Department of Environmental
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